MGM Resorts Or Las Vegas Sands: Which Is Worth The Gamble?
Zacks Investment Research | Jun 24, 2019 08:35AM ET
Operators of integrated casino, hotel and entertainment resorts seldom fail to build businesses as demand for casino services is relatively inelastic. This is because casinos attract a particular set of consumers, whose preferences remain more or less similar despite adverse market conditions.
In addition to this, the legalization of sports betting outside Nevada widened the scope for casino operators since illegal betting is valued at billions of dollars annually in the United States. Further, casino operators are collaborating with the hospitality sector, setting up luxury hotels and generating high-margin non-gaming revenues.
But it is not prudent to think that the industry has no hurdles to combat. An ongoing trade war between Washington and Beijing is continuously hurting casino stocks. Moreover, increased hotel openings and promotional activities made Las Vegas and Macao markets highly competitive. Thus, excess supply, especially in the Macao market, is a challenge for individual casino providers. Also, the industry is infested with high debt levels.
Amid such a backdrop, leading casino companies like Wynn Resorts (NASDAQ:WYNN) , Penn National Gaming, Inc. (NASDAQ:PENN) , Las Vegas Sands Corp. (NYSE:LVS) and MGM Resorts International (NYSE:MGM) are continuously devising strategies to drive revenues and profits. In response to a rapidly evolving and dynamic market, Las Vegas Sands and MGM Resorts are capitalizing on the significant profit associated with the business. The companies currently carry a Zacks Rank #3 (Hold) and have respective market capitalization of $45.8 billion and $14.9 billion.
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